UPDATE 1-Singapore June exports beat forecasts, outlook still murky

July 16, 2012|Reuters

By Kevin Lim SINGAPORE, July 17 (Reuters) - Singapore reportedbetter-than-expected export data for June on Tuesday, providinga glimmer of hope that a prolonged slide in Asia's keyelectronics sector has bottomed, but economists cautioned thatglobal demand still appeared weak. The Southeast Asian city-state, whose open economy is seenas a barometer for the region's propects, said non-oil domesticexports (NODX) rose 6.8 percent in June from a year earlier,beating the forecasts of all 14 economists polled by Reuters. Singapore's domestic exports of electronics edged 1.6percent higher in June from a year ago, while non-oil retainedimports of intermediate goods, a leading indicator ofmanufacturing activity, rose for a second month after seasonaladjustment. On a seasonally adjusted month-on-month basis, NODX grew 6.7percent after contracting 2.0 percent in May. "The story we like is that at least electronics NODX lookslike it's stabilised -- it's not on a declining path anymore,"said Selena Ling, head of treasury research and strategy atOversea-Chinese Banking Corp, Singapore's second largest lender. "But if you look at the IMF downgrade of 2013 growth, itseems like we don't expect a very strong pick-up in externaldemand in the near term, especially on the euro zone front," sheadded. The International Monetary Fund (IMF) on Monday cut itsforecast for global economic growth and warned that the outlookcould dim further if policymakers in the euro zone do not actwith enough force and speed to quell their region's debt crisis.

Closer to home, Singapore electronics firm Hi-PInternational said late on Monday it will shut itsMexican subsidiary and report a loss for the second quarterended June, contrary to earlier guidance. Data released overnight also showed U.S. retail sales fellin June for the third straight month, the longest run ofconsecutive drops since 2008 when the country was mired inrecession. Consumer spending drives about two-thirds of the U.S.economy.

ELECTRONICS, PHARMACEUTICALS Barclays economist Leong Wai Ho said the Singapore datasuggested the global economy was not as weak as somecommentators have suggested. "We see reasons to be optimistic about a resumption of agradual recovery in electronics in the second half, driven by aslew of product launches," he said. Leong said the June export numbers also raises the chancesof a small upward revision to Singapore's second quarter grossdomestic product, which shrank 1.1 percent on an annualised andseasonally adjusted basis, according to advance estimates. The weak GDP data, which was released last week, hadprompted some economists to cut their growth forecasts forSingapore. But other economists warned against reading too much intothe numbers, noting the rise in June domestic exports, whichtotalled S$15.7 billion ($12.4 billion), was due primarily tohighly volatile pharmaceutical shipments, which jumped 24percent from a year earlier. "The weak global economic conditions were still evident inJune's numbers if you look beyond the jump in pharmaceuticals,which was not driven by a cyclical upswing but rather the usualvolatility associated with changes to the product mix," saidHSBC's chief economist for India and Southeast Asia LeifEskesen. "Electronics is a better bell-weather of global economicconditions and (Singapore's) shipments were relatively weakacross products and markets, although Hong Kong, Taiwan, andJapan cranked up imports," he added. Non-oil exports to the European Union rose 17 percenton-year compared with a rise of 1.5 percent in May and acontraction of 12.2 percent in April. Shipments to the United States fell 2.0 percent last monthafter shrinking 11.4 percent in May, while those to Chinaworsened, contracting 3.2 percent compared with a dip of 0.8percent in May. Key figures (y/y pct change) June May April non-oil domestic 6.8 3.2 1.7 exports - to US -2.0 -11.4 -18.6 - to EU 17 1.5 -12.2 - to China -3.2 -0.8 3.8 electronics 1.6 3.9 1.0 pharma 24.0 0.3 -7.1 ($1 = 1.2652 Singapore dollars)